17.35 (CLOSE): Political uncertainty in the eurozone resurfaced today as the FTSE 100 index struggled to build on last week's near three-month high.

Fears over Mario Monti's announcement that he plans to resign as Italy's premier were tempered after it emerged US president Barack Obama and house speaker John Boehner met on Sunday to resolve their differences.

The FTSE 100 Index closed up a modest 7.23 points to 5921.63.

Sausage and bean melt-down: Greggs shares took a tumble, down 14p to 472.5p, after chief executive Ken KcMeikan announced he was leaving to join catering company Brakes.

US politicians now have three weeks to agree a budget deal to avoid the impending fiscal cliff, which if unresolved could see automatic spending cuts and tax rises introduced.

Rising factory output figures in China and the support of better-than-expected US jobs figures before the weekend also gave the Dow Jones Industrial Average a positive start today.

The pound was up against the euro at 1.23 after Mr Monti said he found it impossible to lead after the party of former Prime Minister Silvio Berlusconi dropped its support. The pound was also up against the US dollar at 1.60.

Insurer Aviva, which generates business in both Italy and Spain, was near the top of the FTSE 100 Index faller list with a decline of 1.8 per cent, off 6.6p to 359.7p.

Other financial stocks were under pressure as Royal Bank of Scotland dipped 1.2p to 297.8p and Barclays eased 2p to 249.55p.

Rolls-Royce shares were also lower as investors weighed up further developments on the bribery claims relating to contracts in Indonesia.

The engines giant disclosed last week that it was in talks with the Serious Fraud Office in relation to concerns about bribery and corruption in Asia.

As it emerged that the company's former chief service representative had raised his concerns on local newspaper and industry news internet sites since 2006, shares in the blue-chip company fell 5p to 891.5p.

Outside the top flight, shares in bakery chain Greggs were down 14p to 472.5p - after well-respected chief executive Ken McMeikan announced he was leaving the group to join catering company Brakes.

He credited Mr McMeikan with creating a more efficient supply chain and developing a fit-for-purpose retail estate, including more shops at bus and train stations.

Man Group shares jumped 5 per cent after chief executive Peter Clarke stepped down from the hedge fund manager amid the dismal performance of its flagship fund. He will be replaced by Emmanuel Roman,

Man's chief operating officer, who joined when his own firm, GLG Partners, was taken over by Man two years ago. Shares rose 3.65p to 77.3p.

Shares in set-top box manufacturer Pace were suspended at 185.4p today after it revealed it is working on plans to merge its business with a Google-owned rival.

West Yorkshire-based Pace has submitted a bid for Motorola Home, the internet giant's set-top box division.

The biggest FTSE 100 risers were Associated British Foods up 21p to 1506p, Smith & Nephew ahead 12.5p to 678.5p, Kazakhmys 8.5p higher at 754p and Tate & Lyle up 10p to 769p.

The biggest FTSE 100 fallers were Hargreaves Lansdown down 19p to 716p, Eurasian Natural Resources off 6.8p to 276.2p, Aviva 6.6p lower at 359.7p and WPP down 9.5p to 860p.

15:30: News that US president Barack Obama and house speaker John Boehner met on Sunday to resolve their differences helped offset fears about Europe, pushing the FTSE 100 Index up a modest 7.6 points to 5921.8.

US politicians now have three weeks to agree a budget deal to avoid the impending fiscal cliff, which if unresolved could see automatic spending cuts and tax rises introduced.

Rising factory output figures in China and the support of better-than-expected US jobs figures before the weekend also pushed the Dow Jones Industrial Average ahead.

Plans: Italian Prime Minister Mario Monti announced he intends to resign once next year's budget is approved in parliament

Markets
in France and Germany were flat after Mr Monti said he found it
impossible to lead after the party of former Prime Minister Silvio
Berlusconi dropped its support.

12:00

The
FTSE 100 Index slipped back from Friday's near-three month high,
dipping 13.5 points to 5900.8 despite rising factory output figures in
China and the support of better-than-expected US jobs figures before the
weekend.

More...

Markets
in France and Germany were also down by around 0.5 per cent after Mr
Monti said he found it impossible to lead after the party of former
Prime Minister Silvio Berlusconi dropped its support.

The
economist and former European Union competition commissioner was
recruited to head a government of technocrats and has earned praise for
restoring confidence in the debt-laden country.

Insurer
Aviva, which generates business in both Italy and Spain, was the
biggest FTSE 100 Index faller with a decline of 2.5 per cent, off 9.75p
to 356.5p.

Other financial stocks were under pressure as Royal Bank of Scotland dipped 2.95p to 296.1p and Barclays eased 3.1p to 248.4p.

Man
Group shares jumped 4 per cent after Sky News reported that chief
executive Peter Clarke was stepping down from the hedge fund manager
amid the dismal performance of its flagship fund. He is likely to be
replaced by Emmanuel Roman, Man's chief operating officer, who joined
when his own firm, GLG Partners, was taken over by Man two years ago.
Shares rose 3.2p to 76.9p.

10:30

The FTSE is down 17.92 points at 5,896.48.

Despite
slumping to a loss for the first half of the year, Britain's biggest
coal producer has successfully completed a reshuffle of its business
today in a move that safeguards 2,500 jobs.

UK
Coal, which was renamed Coalfield Resources, has split its operations
into two businesses - a mining arm called Mine Holdings and property
division Harworth Estates.

Ownership
has been broken up between the company - which generates about 5 per
cent of Britain's electricity requirements - and a newly established
Employee Benefit Trust, and the Pension Fund. Read more here.

Millions
of pounds will be pumped into the expansion of Pizza Hut's delivery
division which the fast food chain hopes will create thousands of jobs.

Pizza
Hut Delivery aims to open at least 100 new stores by 2014 through
investment of about £20million, requiring up to 2,000 new staff.

A key part of the investment is the launch of a new franchise incentive scheme developed to support the opening of new stores.Read more here.

10:15

The FTSE 100 is down 20.22 points at 5,894.18, and news from Japan and China is no better.

David
Madden, market analyst at IG said: ‘The latest GDP figures from Japan
revealed that the country is in recession. Output for its final quarter
fell by 0.9 per cent, and the previous quarter was revised down to a 0.1
per cent contraction. The third largest economy in the world is now in
its fifth recession in fifteen years.

‘China’s
strong industrial production was also offset by much
weaker-than-expected exports. Overall, investors are taking away from
this that the Far East is far from strong.’

09:30

The FTSE is down 12.99 points at 5,901.41.

Fawad
Razaqzada, market strategist at GFT Markets, said: 'Wall Street futures
had been pointing towards a flat open although news that the Italian
Prime Minister Mario Monti now plans to resign after the next budget is
passed served to rock markets on both sides of the Atlantic.

'Clearly
shares in Milan have come off worse - and Italian bond yields have
jumped, too - but the fact remains that markets don't like uncertainty
so the downside pressures are being felt across the board. Furthermore
there's an understanding that Berlusconi will stand for re-election and
with markets demanding a tough line on austerity and tax collection,
this again has the ability to knock sentiment.'

09:00

Rolls-Royce
shares were two per cent lower today as investors faced up to more
details of the bribery claims relating to contracts in Indonesia.

The
engines giant disclosed last week that it was in talks with the Serious
Fraud Office in relation to concerns about bribery and corruption in
Asia, prompting its shares to fall three per cent at one stage.

As
it emerged that the company's former chief service representative had
raised his concerns on local newspaper and industry news internet sites
since 2006, shares in the blue-chip company fell 15.25p to 881.25p.

There
were more concerns over the eurozone after Italian Prime Minister Mario
Monti's announcement that he intends to resign by the end of the year.

Financial
stocks were unsettled by the developments, with pan-European insurer
Aviva off 6.5p to 359.75p and Royal Bank of Scotland down 2.55p to
296.45p.

Outside
the top flight, shares in bakery chain Greggs were off nearly three per
cent - down 13.9p to 472.6p - after well-respected chief executive Ken
McMeikan announced he was leaving the group to join catering company
Brakes.

08:00

The FTSE has edged lower, with
Italian political wrangles putting the spotlight back on to the eurozone
crisis and overshadowing tentative signs of improvement in the global
economy.

Italian Prime
Minister Mario Monti said on Saturday that he would resign after the
2013 budget is approved, increasing political uncertainty in the heavily
indebted country and likely bringing forward elections to February.

With
unpredictable Silvio Berlusconi bidding to return to power, the news of
Monti's resignation unsettled equity markets, prompting investors to
take profits on three weeks of gains.

The FTSE 100 is down 9.55 points or
0.2 per cent at 5,904.85 after failing to break above key technical
resistance in the 5,920-5,930 area last week.

Banks, which are most directly
exposed to the eurozone crisis through sovereign debt holdings, were one
of the worst performing sectors, down 0.5 per cent.

PREVIEW:

The FTSE 100 index is expected to
open up 5-12 points, or as much as 0.2 per cent this morning, according
to financial bookmakers.

The UK blue chip index closed up
12.98 points, or 0.2 per cent, at 5,914.40 on Friday, after data showed
U.S. non-farm employment increased by a better-than-expected 146,000
jobs last month.

Over
the weekend, Chinese data sent mixed messages on the economy, with
factory output and retail sales beating expectations with strong rises
in November, but imports flatlining and exports coming in much weaker
than forecast.

For markets, though, the stronger numbers proved more influential overnight with Brent holding steady and copper at near 2-month highs in a potentially positive sign for Britain's heavyweight energy and mining stocks.

The eurozone crisis was set to remain in the spotlight after Italian Prime Minister Mario Monti announced on Saturday that he would resign once the 2013 budget is approved, potentially bringing forward an election due early next year and fuelling speculation that he might run.

No major UK companies are due to report on Monday.

SHARES TO WATCH TODAY

DIAGEO : Drinks group Diageo has held talks with Japanese brewer Suntory about making a joint bid to acquire bourbon whiskey maker Beam for more than $10 billion, Britain's Sunday Telegraph reported, citing unnamed sources.

PEARSON : New York City Mayor Michael Bloomberg is weighing up whether to make a bid for Pearson's The Financial Times Group, which includes the namesake paper and a half interest in The Economist magazine, the New York Times reported, citing three people close to the mayor.

BANKS: Both the United States and United Kingdom have developed viable approaches to seizing and unwinding failing global financial institutions, but more work is needed on the UK side to ensure that losses can be adequately absorbed, American and UK regulators said on Sunday.